World

The leaders of France and Germany said boosting economic growth across Europe was a priority in their efforts to stem the debt crisis that is showing signs of spreading across the 17 countries that use the euro.

Following a meeting in Berlin on Monday with French President Nicolas Sarkozy, German Chancellor Angela Merkel also urged Greece and its private creditors to quickly agree the restructuring of the country's national debt if it is to receive its next batch of bailout cash.

In October, the eurozone agreed a second handout for Greece that involves the country's private creditors accepting a 50 percent reduction in the value of their holdings of Greek debt.

She added that both she and Sarkozy want Greece to receive the money.

Sarkozy also said he supported a tax on financial transactions.

"If we find ourselves in this situation it's because there were a scandalous and inadmissible deregulation of the financial market," the French leader said. "It is only normal that those who contributed towards placing us and the rest of the world in this situation for the past three years participate in solving the problem."

Merkel also supports the idea, but wants it implemented at the European level.

On Friday Sarkozy said France would forge ahead with the tax even without support from its European partners

The two leaders also said they would consider speeding up payments into the 17-nation eurozone's permanent rescue fund, the European Stability Mechanism (ESM), in an effort to bolster confidence, and for a quick conclusion to negotiations on a new treaty enshrining fiscal rules.

Germany has insisted on austerity measures in the so-called eurozone's fight to lower budget deficits and regain investor confidence.

Europe is working to hammer out a new treaty enshrining tougher fiscal rules, which all EU countries but Britain agreed at a summit in early December.

Merkel added that resolving the crisis will be a gradual process without a single-dimension solution.

They also told reporters that Europe should compare countries' labor market practices and learn from the best, and for European funds to be used in a way that could create jobs.

The French and German leaders are working to draw up new budget and fiscal guidelines by March to help contain a debt crisis that threatens to engulf the eurozone.

Greece, whose sovereign debt problems sparked the current crisis, is struggling top impose austerity measures to ensure that it secures a second, euro130 billion (b) (165 billion (b) US dollars) bailout to ensure that it does not default on its debt and remain in eurozone.

Monday's meeting of Merkel and Sarkozy comes ahead of new Italian Premier Mario Monti's first visit to Berlin Wednesday.

Merkel's spokesman said the chancellor plans an informal meeting in Berlin on Tuesday evening with IMF chief Christine Lagarde.

Merkel and Sarkozy will travel to Italy on January 20 before a European summit at the end of the month.

Italy is a key focus of the crisis because of its size, huge debt load and need to borrow heavily in the first quarter.